Shop says new piston rings required. Am I being conned?

[Jamieg285]

Given that the workshop have explained how they came to think it's piston rings, I'd be inclined to accept that's what the problem is. 

We know from your own compression tests that there was a problem in that cylinder, and with unfazed saying that the bores are rarely an issue, all that remains is the rings. 

For that much money, you might be better off buying a replacement engine to swap in, then selling yours for spares/repairs to reduce the overall cost.